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March 7, 2006

Council remains concerned about potential effect of renewable-energy mandate on costs, reliability

New York State should implement its new renewable portfolio standard (RPS) in a way that minimizes increases in New York’s already high energy costs and ensures that the reliability of New York’s electricity system is not undermined, The Business Council told two Assembly committees in testimony today.

In its testimony, the Council also said that New York State’s top energy priority should be siting new electricity-generating capacity.

“We are not opposed to renewables. Our companies have been the beneficiaries of the state’s most abundant form of renewable energy - hydropower,” Anne Van Buren, the Council’s director of telecommunications and transmission policy for the Council, said in testimony before the Assembly Committee on Energy and the Assembly Subcommittee on Renewable Energy.

“What we do object to is being forced to subsidize those renewables that are not cost competitive,” she added.

Van Buren reminded lawmakers that The Business Council has long expressed concerned about New York’s high costs and the effect of the RPS on electricity costs.

Citing data from the Energy Information Administration, Van Buren noted that New York’s average energy price for all sectors in 2004 was 57 percent higher than the national average.

What’s more, the state Energy Plan adopted in June 2002 noted that “energy prices tend to be important factors in business location and expansion decisions, particularly for energy-intensive businesses. Corporations routinely favor locations that have the greatest profit potential. Less profitable facilities will, at best, not be expanded. At worst, they will be closed, with a resultant loss of jobs.” The plan went on to say that “the cost of energy, however, remains an obstacle to overcome in New York’s efforts to retain, expand, and attract business.”

The state Public Service Commission (PSC) ordered creation of the RPS in August of 2005. Besides adding a $24 million annual surcharge to New Yorkers’ electric bills, the RPS will require that 25 percent of electricity purchased in New York by 2013 be from renewable resources. This is expected to drive up electricity costs in New York State that are already among the nation’s highest.

The Council’s testimony suggested that:

The testimony concluded, “The bottom line is New York needs more baseload power. Businesses and residents alike use more electricity than ever before. We can import some power from other states and Canada, but for cost and reliability reasons, we need more generation capacity right here at home - as well as improved transmission and distribution lines to deliver power where its needed.

“Rather than striving to increase the cost of electricity, state leaders should fulfill the promise of the State Energy Plan by reducing government-mandated surcharges on energy bills.”